How To Control Expenditure in Schools, Colleges and Training Providers
Remaining solvent in education is a matter of ensuring expenditure of all kinds remains lower than income.
It is as simple as that.
But saying it and achieving it is a totally different matter.
So how is it possible to maintain expenditure at a level where, in times of underfunding, it is below the limited funding and/or income we are receiving?
What Expenditure Items Can Be Cut
Let’s start by considering the major items of expenditure. According to the CEOs and FDs we spoke to Staffing and Capital costs are at the the top of the list. That’s good as in many senses these are the easiest to control.
Let’s look at some examples ….
College A intends to build a state of the art £20m teaching block. It needs to control expenditure.
If they could find a way to cut back the square footage total costs will drop and borrowings will be reduced. Of course cutting the size of the building by 25% isn’t going to cut total costs by 25%. life isn’t that simple. But it will reduce costs by a significant amount and borrowings will be reduced. Interest payments will be reduced in line with the reductions and balancing the books becomes much easier.
The question is how do you reduce the size of a building by 25% .. or maybe even 40%?
There are various ways to do this. They involve a total rethink of how we use buildings and for many will be an unthinkable step to far. But as Einstein said, “The definition of insanity is doing the same thing over and over again, but expecting different results.”
College B spent several $5m building a new classroom and practical block. The capital costs included ground source pumps to heat the building in winter, rainwater recycling to cut water costs in the toilets, photo-voltaic panels to generate electricity and a few other pieces of green tech to keep future costs down. These extra costs were recouped in two years and are now generating a surplus which helps cover interest costs on the money they borrowed for the rest of the project. They are now able to control expenditure.
College C has a large underground car park they charge the public to use. The cost of lighting this has been drastically reduced by changing from neon to LED lighting. A wind generator on top the building is also being considered as a further way to generate power.
For more specific information on this topic please check out the menu items under Underfunding Solutions at the top of the page. Here you will find specific information, in the drop down, on a range of specific areas.
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